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In what seems like a really bizarre policy, Russia is set to ban gambling from most of Russia. Casinos will be limited to some remote regions and shut down elsewhere. From The New York Times:

One of the largest mass layoffs in recent Russian history is to occur on Wednesday, and the Kremlin itself is decreeing it, economic crisis or not.

The government is shutting down every last legal casino and slot-machine parlor across the land, under an antivice plan promoted by Vladimir V. Putin that just a few months ago was widely perceived as far-fetched. But the result will be hundreds of thousands of people thrown out of work.

And in a move that at times seems to have taken on almost farcical overtones, the Kremlin has offered the gambling industry only one option for survival: relocate to four regions in remote areas of Russia, as many as 4,000 miles from the capital.

...

The gambling industry here does not have the loftiest of reputations, and many Russians will not grieve for it. Still, many of the 40 or so casinos in Moscow sought in recent years to behave more respectably, even as hundreds of slot-machine parlors retained a seedy, enter-at-your-own-risk feel.

The gambling industry says the ban will leave more than 400,000 people without work in Russia, at a time when it has been hard hit by the economic downturn: the World Bank predicts the economy will contract by 7.9 percent this year. The government has put the figure at 60,000 people, though industry analysts say that is absurdly low.

Vladimir Putin is billing this as an anti-vice policy. No doubt the Christian conservatives will love it but is that really the reason for the ban?

The New York Times suggests that it is an attempt to penalize Georgian immigrants but I'm not sure I buy that. The article says, "His plan was announced during a spy scandal between Russia and its neighbor Georgia, and the timing suggested that Mr. Putin was in part seeking to wound the Georgian diaspora here, which is said to have an influential role in the industry." I doubt that the government would shut down gambling everywhere just to punish the Georgians. Besides, I doubt that Georgians are the main owners of the casinos.

My guess is that the government is attempting to crush organized criminals. Like most countries, casinos are a dubious business—recall how Charlie Munger, Buffett's partner, suggested that gambling is generally a dirty business (although I suppose Las Vegas would disagree.) This is doubly so in Russia, which was once ruled by the Russia mafia. I suspect this is Putin's final step in his grand plan to flush out the mafia.

Having said all that, speaking as liberal who is very libertarian on many issues, I am against any government trying to regulate gambling. Not only does it never work (it'll go underground), the government should be focusing on more important issues.

1 Response to Russia bans casinos from most of the country

Ben

January 9, 2010 at 9:12 AM

Great article and although the closure of most casinos in just means that Russians will turn to the black market and set up on their own in the underworld. Those looking for legitimate gambling outlets will either have to travel or try online casinos instead. Russia has always been known for their mafioso approach and long will that unfirtunately continue.